International Construction Law Review
DISPUTE BOARDS—GOOD NEWS AND BAD NEWS: THE 2005 “HARMONISED” CONDITIONS OF CONTRACT PREPARED BY MULTILATERAL DEVELOPMENT BANKS AND FIDIC
GORDON L JAYNES*
Fortunately, the good news outweighs the bad news. The major good news is that certain banks1
have agreed to require
the use of Dispute Boards (“DB”) for all contracts for which they provide financing if the estimated contract value, including contingency allowances, is more than US$10m. or its equivalent. This is understood to be the first time that all of these banks have required (as distinct from recommended) the use of Dispute Boards.
The precise basis of the agreement of the banks is not clear from the text of their first standard bidding document, which is that of the World Bank.2
Page ii of the document states that the World Bank’s May 2005 revision to its Standard Bidding Document
“… is to conform, to the extent possible without contravening the May 2004 Guidelines [for The World Bank] to the model provided by the Master Procurement Document for Procurement of Works & User’s Guide harmonized among various Multilateral Development Banks (MDBs) and approved by the heads of Procurement of the MDBs and International Financial Institutions (IFIs) in October 2004.”3
The World Bank states, also on page ii of the document, that in collaboration with FIDIC, a new set of General Conditions has been agreed by the banks, and within those General Conditions
“the most significant change is the introduction in Clause 20, Claims, Disputes and Arbitration, of a Dispute Board which may be comprised of one or three members, as may be determined by the Employer and indicated in the Contract Data (Part A of Section VIII, Particular Conditions) without regard to the estimated cost of the contract”.4
* Mr Jaynes can be reached at GLJ4law@aol.com.
1 The banks, as announced by FIDIC, are: African Development Bank, Asian Development Bank, Black Sea Trade and Development Bank, Caribbean Development Bank, European Bank for Reconstruction and Development, Inter-American Development Bank, International Bank for Reconstruction and Development (the World Bank), Islamic Bank for Development Bank [sic
], and Nordic Development Fund.
2 The document can be found at the web site of the World Bank, www.worldbank.org, and can be downloaded free of charge. It is headed “Standard Bidding Document” and entitled “Procurement of Works & User’s Guide”, May 2005. It will be noted that the Bank’s document uses the spelling “harmonization”, whereas FIDIC’s document, published in October 2005, uses the spelling “harmonisation”, which has been adopted in this article, except when quoting from the Bank’s document.
3 The MDBs and IFIs are not identified in the World Bank document. The “Master Procurement Document” and 2004 Guidelines seem not to be available on the World Bank’s website.
4 “Contract Data” is a substitution for the former World Bank form “Appendix to Bid” which Appendix was modelled on the FIDIC form “Appendix to Tender”.
Pt 1]
Dispute Boards—Good News and Bad News
103